CALGARY, ALBERTA–(Marketwired – Jan. 24, 2017) – Petrus Resources Ltd. (“Petrus” or the “Company”) (PRQ.TO) is pleased to announce a term loan refinancing and provide a corporate update including outlook for 2017.
SECOND PRIVILEGE TERM LOAN
Petrus has reached an agreement with Macquarie Bank Limited to extend the company’s $42 million second lien term loan for two years; now due October 2019. Concurrent with the extension, the Company reduced the outstanding amount by $7 million through working capital and available credit facilities. The interest rate on the remaining $35 million will remain unchanged at the Canadian Dealer Offered Rate (CDOR) plus 700 basis points (currently equaling a total interest rate of 7.9%).
PRODUCTION AND OPERATIONS UPDATE
Petrus’ 2016 drilling program focused in the Ferrier area targeting Cardium liquids-rich natural gas. Three gross wells (1.2 net) of the last four gross wells (1.6 net) of the program are now in production. With the addition of these new wells, monthly production from Petrus in January is expected to be approximately 9,000 boe/d. The last well in the program is nearing completion and is expected to come on stream in early February. Based on the Company’s year-end production and estimated capital expenditures for 2016 (excluding acquisitions and divestitures), Petrus added production at a cost of approximately $14,000 per boe/d. Using historical data and an estimate of production in the field, the Company estimates that its rate of decline in base business production is approximately 28%. Since the acquisition of Arriva Energy Inc. on September 9, 2014, Petrus has drilled 15 wells in the Ferrier area and participated as a direct partner in 5 additional wells. During the same period, the Company increased net production in the Ferrier area from approximately 1,000 boe/d to over 5,000 boe/d.
The Petrus Board of Directors has approved a capital budget of $50-60 million for 2017. Based on the economy and repeatable results characteristic of the Ferrier Cardium game, capital in 2017 is expected to be primarily spent on development of the company’s Ferrier assets. The program is expected to include the drilling of 16 gross (11.7 net) Cardium wells at Ferrier. The use of platform drilling from locations close to existing Petrus infrastructure should further improve capital efficiency. The program also includes investments in facilities; processing and compression capacity at the Ferrier Gas Plant is expected to be doubled to approximately 60 mcf/d of capacity by the fourth quarter of 2017. Capital will also be allocated to the expansion of the collection from Ferrier to tie additional volume to Petrus’ Ferrier Gas Plant for processing.
The 2017 capital budget is expected to add net production at a cost of approximately $15,000 per boe/d. Petrus expects the 2017 capital program to increase estimated production from the December 2016 field of 8,572 boe/d by approximately 12-18% by year-end 2017 to 9,600 at 10,200 boe/d, based on forecast service costs and activity levels, or approximately 28% base decline rate and current capital structure. The 2017 capital program is expected to be funded by cash flow and working capital.
Petrus is also pleased to announce three executive appointments. Mr. Brett Booth has been appointed Vice President Land, Mr. Marcus Schlegel has been appointed Vice President Engineering and Mr. Ross Keilly has been appointed Vice President Exploration. All three executives previously held senior positions at Petrus and have demonstrated significant leadership and commitment to the organization. Their contributions to the strategy, culture and growth of the Company have been and will continue to be essential to the success of the Company.
MONTHLY ACTIVITY UPDATE
Petrus provides a monthly activity update that includes an estimate of production and capital investments. It is available on our website where there is also a registration link for e-mail distribution.
The company plans to release its annual financial results on March 9, 2017.
Petrus is a public Canadian oil and gas company focused on property development, strategic acquisitions and risk-managed exploration in Alberta.
NOTICE TO READERS
This press release contains forward-looking statements. Specifically, this press release contains statements regarding plans related to the Company’s 2017 capital budget, including planned drilling and other operations, planned production ramp-up, planned source of budget funding the 2017 investment plan, the expected timing of the start of production of the wells and the company’s forecast base rate of decline. The forward-looking statements contained herein are based on certain key expectations and assumptions made by Petrus, including: (i) with respect to capital expenditures, generally and in particular locations, the availability of adequate sources of financing and secure for Petrus ‘ the proposed capital expenditure program and the availability of appropriate opportunities to deploy capital; (ii) with respect to drilling plans, availability of drilling rigs, expectations and assumptions regarding the success of future drilling and development activities and prevailing commodity prices; (iii) with respect to Petrus’ ability to carry out its exploration and development program, the performance of Petrus’ personnel, the availability of capital and prevailing commodity prices; and (iv) with respect to expected production, the ability to drill and operate wells on an economic basis, the performance of new and existing wells and the accounting risks generally associated with petroleum exploration and production and gas; (v) oil and gas prices; (vi) exchange rate; (vii) royalty rates; (viii) operating costs; (ix) transportation costs; and (x) the availability of opportunities to effectively deploy capital. Although Petrus believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements as Petrus cannot guarantee that they will prove to be accurate. Because forward-looking statements address future events and conditions, they, by their very nature, involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the inability to obtain the necessary regulatory approvals, risks associated with the oil and gas industry in general (for example, operational risks in the development, exploration and production; delays or changes in exploration or project development plans or capital expenditures; uncertainty of reserve estimates; uncertainty of production, cost and expenses; health, safety and environmental risks; fluctuations in commodity prices and exchange rates; and uncertainties resulting from potential delays or changes in plans with respect to exploration or development or capital expenditures). Readers are cautioned that the foregoing list is not exhaustive of all possible risks and uncertainties.
The forward-looking statements contained herein are made as of the date hereof, and Petrus undertakes no obligation to publicly update or revise any forward-looking statement or information, whether as a result of new information, future events or other.
The term barrels of oil equivalent (“boe”) can be misleading, especially when used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas per one boe (6 mcf/bbl) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalence at the wellhead. All boe conversions in this report are derived from converting gas to oil at the ratio of six thousand cubic feet of gas to one barrel of oil. Since the value ratio based on the current price of crude oil to natural gas is significantly different from the energy equivalence of 6:1, using a conversion on a 6:1 basis can be misleading. as an indication of value. The forward-looking statements contained herein are made as of the date hereof, and Petrus undertakes no obligation to publicly update or revise any forward-looking statement or information, whether as a result of new information, future events or otherwise, unless required. by applicable securities laws.